Our toolbox is located on a normal network drive - totally isolated from PDM. Here we have added custom folders containing the hardware commonly used - sizes not in stock will be red. This drive is made read-only so only administrators can add/modify/recolor parts. I know that having assembly components located on a network drive is not recommended, but toolbox parts are normally very small and loading time is insignificant.

Besides we really had trouble transferring our Workgroup data to PDM Standard so I hesitate to move the toolbox as it is working satisfactory.

I prefer option 2. Yes, it does require Toolbox to be upgraded separately. I usually just do it as soon the vault is upgraded so it's ready to go for users as they upgrade their software. It usually takes less than 20 minutes or so to do. Timing is always a bit more complex when you have server side products as well.

Option 1 - bit of a night mare as toolbox components can have hundreds/thousands of configurations and the file size grows.

Number 3 is the way I've done it. Tried it the other way, too many headaches and glitches.

Individual parts saved off into "vault"\Library Parts\"type of part" folder structure. Then I use the sldsetdocprop.exe program to set to a toolbox part if it isn't already set. This way you can avoid having those parts selected during copy tree scenarios.

Definitely set up as parts (Setup 2) on a vaulted Toolbox. PDM manages files, not configurations. The idea is similar to that of virtual components: if you use virtual components in an assembly, you are essentially taking the parts out of the PDM system. counter-intuitive to PDM's purpose. As far as "performance" goes, either one will be just as quick. However, if your Toolbox database goes corrupt, as it did during some reported upgrades 2017 (SPR 1043529), you will have to start from scratch with creating configurations if the database file cannot be repaired by SOLIDWORKS Corp. Just stick to set up as parts, and you will be in a more secure place. if issues happen, you can re-index parts to update the toolbox database. Having all this said, option 3 is the least ideal option. I'll tell you what, one of our largest customers had the worst "slowness" issues being reported when they open their large assemblies. they had to wait up to 30 minutes on some assemblies that were just shy of 500 components. the issue turned out to be only that the toolbox being placed in a network drive.

Thank you for your input everyone, it's currently a draw between 2 and 3.

What triggered this post was an upgrade from SP3 to SP4 which stopped because Toolbox path is invalid. This is a "2" vault. I created an SR for that one because that is definitely not the outcome i expected.